After the nation's economy caught a glimpse of hope in early 2012, momentum seems to be slowing. Economist Paul Krugman's theories are taking center stage, but I question how they are becoming so popular. I read his articles and many common sense questions come to mind. His spending, stimulus, and expand deficit spending policies just don't seem to make logical sense.
One of Krugman's main critics, Jeffrey Sachs, questions Krugman's theories in a recent Bloomberg article. Sachs sums it up nicely when he says that Krugman has “under-emphasized the risks of growing debt, he’s over-asserted what we really know about the effects of these policies and he has underestimated the long-term need for public-sector change and reform.” I completely agree with Sachs. It gets to the point where our national security is at risk when our debt is so deep. The thoughts of turning into Greece sends chills down my spine. Barack Obama has tried to pump money into the system and realized solely stimulus plans do not work. A median needs to be struck. Krugman's fiscal belief that we didn't put enough money into the system puzzles me.
Krugman states the U.S economy is headed towards depression because an excess supply of savings prevented full employment. In reality, people are getting laid off because companies are in too much debt to pay employees. The issue is rooted in our debt. As Sachs correctly claims, fix our debt, make spending reforms and we'll get back on track soon enough. Economists will continue to argue and hopefully the correct decision is the one implemented!
Krugman is a great choice: important both because he's writing on the most important issues of the day, and because he is an iconic voice. While he's broadly recognized as smart on the economic issues, I will appreciate seeing what his flaws might be.
ReplyDeleteThey call economics the dismal science, but I am sure you will bring some levity to it, Anthony!
I have never heard of Krugman before and so therefore I am excited to see what you have to say about him. My first impression of him so far, comes from you and you speaking so highly of him. He seems like an intelligent man who knows how to educate the general public and show them the way things should run. I, like Dr. Stiltner, am excited to see what people say against him. It's hard to be center stage and have everyone like you. Being a science major, Krugman is someone I can utilize and listen to in order to better understand our economy and the status of our country. Sometimes politicians like to sound smarter than the general public so they see how "stupid" they actually sound. Krugman opens up a resource for me.
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